Concentrated Liquidity

SuperSwap introduces an advanced feature for liquidity providers: the ability to use "concentrated" capital within specific price ranges. Providers can select a precise price interval to supply liquidity, allowing them to focus their capital where trading activity is most frequent. This approach significantly boosts the efficiency of investments, particularly in stablecoin pools where asset prices remain relatively stable. In these pools, capital efficiency can increase dramatically, up to 4000x.

SuperSwap's Super Liquidity (CL) feature, inspired by and improving upon Uniswap V3’s model, is also fully compatible with Uniswap V3 tools. This innovation enhances the Swap, Liquidity, and Farm functionalities, offering users a sophisticated system to maximize their returns. For a detailed understanding of these benefits and how they reshape trading dynamics across the Superchain, refer to our comprehensive documentation.

SuperSwap redefines liquidity provision by offering Liquidity Providers (LPs) precise control over their capital's price range allocation. This system aggregates individual positions into a single pool, forming a unified liquidity curve for trading. By concentrating capital in the most actively traded price ranges, SuperSwap ensures capital-efficient trading, enhances liquidity, reduces slippage, and optimizes capital usage across various fee tiers.

In traditional AMM systems, liquidity is spread across an extensive price curve (x*y=k), often resulting in underutilized capital. For example, in a typical USDT/USDC pair, only about 0.50% of capital might be actively traded between $0.99 and $1.01, despite this being the expected high-volume trading range. In such cases, classic LPs face the challenge of earning fees on a small portion of their capital, which may not offset the price risk or impermanent loss. Additionally, this broad distribution of liquidity can lead to higher slippage for traders.

SuperSwap addresses these inefficiencies by enabling LPs to concentrate their capital within tailored price ranges. This not only increases liquidity where it's most needed but also allows LPs to customize their investment strategies and risk profiles. For instance, an LP in the ETH/USDC pool can allocate capital to specific ranges, such as $2,000-$3,000 and $2,250-$2,500, effectively creating a customized liquidity profile.

This model allows for the combination of multiple concentrated positions within a single pool, enabling LPs to mimic any automated market maker or active order book. It ensures that users trade against the pool’s collective liquidity without incurring additional gas costs for each LP. Moreover, trading fees generated within a particular price range are proportionally distributed among LPs who contributed liquidity to that range, aligning rewards with the liquidity provided.

Through SuperSwap's Super Liquidity, LPs gain a more capital-efficient, flexible, and rewarding system for liquidity provision, enhancing the overall trading experience across the Superchain ecosystem.

Super Liquidity on SuperSwap, inspired by the V3 model, refines how liquidity is distributed by allowing it to be concentrated within specific price ranges. In traditional AMM models like x * y = k, liquidity was spread evenly across all prices, from zero to infinity, resulting in the underutilization of assets.

With Super Liquidity, LPs can define a position, focusing their liquidity within a finite, specific price range, rather than the vast (0, ∞) range. Each position behaves like a mini constant product pool with enhanced virtual reserves tailored for that specific range. The liquidity provider (LP) must hold sufficient quantities of both asset X and asset Y to accommodate price movements to the upper and lower boundaries of their chosen range. If the current price (𝑝𝑐) falls within the range [𝑝𝑎, 𝑝𝑏], the position becomes active, and the real reserves of the position, denoted as 𝑥_real and 𝑦_real, are utilized to provide liquidity and earn fees.

If the price moves outside of an LP’s selected range, the position becomes inactive, halting fee accrual. During this inactive state, the position is composed entirely of one asset, as the reserves of the other asset are fully depleted. However, when the price re-enters the range, the liquidity becomes active again, enabling the LP to resume earning fees.

Super Liquidity provides flexibility for LPs by allowing them to establish multiple positions, each with its own unique price range. This allows LPs to tailor their liquidity distribution across the price spectrum, dynamically adjusting their positions as market prices fluctuate. Rational LPs can optimize their capital by concentrating liquidity around the current price and making real-time adjustments—adding or removing tokens—to maintain active liquidity within their selected ranges.

This approach not only ensures capital efficiency but also allows the market to organically determine liquidity distribution, giving LPs the ability to react to market conditions and maximize their returns on the SuperSwap platform across the Superchain ecosystem.